Paula dittrick
Senior Staff Writer
Many oil and gas companies eagerly are contemplating shale gas development in Europe and elsewhere, hoping to replicate the US gas model. But simply put, could heavily populated cities such as Paris realistically sustain the activities associated with an equivalent of the North Texas Barnett shale?
The French government put its shale oil and gas research permits on hold pending completion in June of a joint study by Energy Minister Eric Besson and Environment Minister Nathalie Kosciusko-Morizet to evaluate the economic, social, and environmental effects of shale exploration (OGJ Online, Feb. 14, 2011).
Analysts agree it's too early to have any idea how many shale plays might develop outside the US and Canada.
Paul Stevens, senior research fellow for Chatham House of London, said potential global unconventional gas resources (coalbed methane, tight gas, and shale gas) are estimated at five times conventional gas reserves. But he notes concerns exist about replicating US shale development and production abroad.
"The US revolution was triggered by favorable factors such as geology, tax breaks, and a vibrant industry," Stevens said.
Although industry has much interest in Western Europe shale potential, Stevens said, "Geology is less favorable, there are no tax breaks, and the drilling industry is far behind the US. Also in a densely populated Europe…disruptions caused by shale gas developments will struggle to find public acceptance. Unlike the US, benefits from gas production accrue to governments, not local landowners."
In a 2010 report entitled "The Shale Gas Revolution: Hype and Reality," Stevens discussed prospects outside the US. In Western Europe, the targets primarily are Poland, Germany, Hungary, Romania, Turkey, and northwest England. ExxonMobil Corp., ConocoPhillips, and Chevron Corp. have signed or are negotiating exploration agreements for shale in the Lublin and Podlasic basins in southeast Poland.
Research initiative
Industry and the German National Laboratory for Geosciences started the first European interdisciplinary research initiative in 2009 for gas shales in Europe. The initiative focuses on potential gas shales, especially Denmark's Alum shale and Germany's Posidonia and Carboniferous shales.
In Latin America, attention is directed toward Argentina and Chile, Stevens said. China and India have expressed strong interest in CBM. China is assessing its shale gas resources.
"However, there are many barriers and constraints to be overcome if the potential is to be converted into energy at the burner tip," Stevens said. Shale gas deposits in Europe are deeper and smaller than those in the US.
European shale plays are fragmented, and the shale is richer in clay, making it less amenable to fracturing. Onshore drilling has been limited in Western Europe, which lacks the history of drill core evidence that exists in the US.
"Traditionally, exploration licenses onshore in Western Europe have been granted over relatively small licensing areas, each with its own specific work program as part of the contract," Stevens said. "The laws and regulations covering oil and gas exploration and development do not even make reference to unconventional gas."
For instance, a gas field normally is defined in terms of the gas-water contact. But there is no such contact point in an unconventional field, and no definable field under current legislation.
"However by contrast, the environmental legislation, especially at a local level, is much tougher and more specific than in the United States—at least up until now—and so would present serious challenges for unconventional gas operations in the context of hydraulic fracturing," Stevens said.
Europe lacks the onshore service industry readily available in the US, he said, adding, "The scale of requirement is enormous." Western Europe had about 100 land rigs available as of April 2010 while 199 rigs were active in the Barnett play at its boom during 2008.
Another consideration is that large-scale disruptions caused by drilling and hydraulic fracturing are likely to general local opposition, Stevens said, noting Europe is densely populated and highly urbanized so large-scale unconventional gas operations would impinge on communities.
"It is likely to be some time before it will become clear whether or not the shale gas revolution might sweep Europe," Stevens said.
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